Sales tax collections reflect growth

Tuesday

Jun 11, 2013 at 12:03 PMJun 11, 2013 at 12:08 PM

One way to monitor economic activity is to monitor the amount of money collected in sales taxes. The amount of sales tax is a percentage of the total sales in the City of Newport. So if the amount collected on the half-cent sales tax is higher than last year that means more money was spent in the city limits than last year.

Sales tax collections in March and April were sharply up in Newport. March was 19 percent above last year and April was 15 percent above last year, indicating that a significant amount of money, actually almost $4,000,000 more in the two months mentioned, was spent inside the city limits.
According to the NEDC, someone asked if it was simply because prices were higher than a year ago. The answer , they say, is "no."
"Most of us have a limited amount of income that we spend in a month." explained the NEDC via newsletter.
"If prices on one thing are higher we don't necessarily have an extra pool of money to go grab and spend from, we just cut back somewhere else so the sales tax we pay on one thing is offset by the sales tax we aren't paying on the other. In fact, rapidly rising prices tends to have a dampening effect on sales tax collections as it makes people worried and they try to spend less."
So, according to the NEDC, the local economy has received a significant bump.
In fact, they say, February, March and April sales are the highest three month period since the NEDC began keeping records in 2002.